26 states opt out of ObamaCare's state-run insurance exchanges

WASHINGTON, D.C., February 18, 2013, (LifeSiteNews.com) – Despite the Obama administration urging states to run their own markets for those without health insurance to purchase subsidized plans, the majority have opted to leave the job to the federal government. Twenty-six states opted to let the deadline for forming state insurance exchanges pass on Friday, leaving the Obama administration to handle the details – and the costs – itself.

The exchanges are designed to let those without insurance compare and buy federally subsidized plans in order to comply with ObamaCare’s mandate that everyone in the U.S. purchase health insurance. States that wanted to run their own exchange or partner with the federal government had to notify the Department of Health and Human Services (HHS) by Friday.

Originally, the choice for each state was between forming their own exchange or leaving it up to the federal government, but after it became obvious that a large number of states were going to decline to set up their own exchanges, federal health officials tried to woo them with a compromise: partnership exchanges that would allow them to pass some of the costs and responsibilities on to the federal government.

The ploy proved ineffective. Only 17 states and the District of Columbia took control of their own state exchanges, while another seven opted to share the duties with the federal government.

“It’s not what the drafters of the bill had hoped would happen,” Timothy Jost, a professor at Washington and Lee University School of Law who specializes in health care, told the Washington Times.

State leaders who formally announced that they had declined participation in the exchanges Friday included Governors Rick Scott of Florida, Chris Christie of New Jersey, and Bill Haslam of Tennessee, all Republicans. They cited a such reasons as high costs, opposition to ObamaCare, and a lack of available information about how the exchanges would work.

Even those who chose to assist the federal government in running their exchanges were wary of the costs. Jeremiah Samples, an official at the West Virginia Insurance Commission, said that West Virginia opted for a partnership exchange because state officials wanted to maintain some control over the regulation of health insurance in the state, but simply could not afford to run their own program. After months of analysis, officials decided that the size of the state’s market and the massive costs associated with information-technology costs necessary to set up the exchange made a state-run option financially unfeasible.

It seems inevitable that the lack of state participation will add significant costs to federal taxpayers’ already rapidly rising tab for the exchanges.

On February 5, the Congressional Budget Office quietly released information showing that the estimated cost of exchange subsidies had been revised upward by $233 billion, for a total cost of more than $1 trillion over the next 10 years – a figure that does not include the amount of money the federal government will now have to spend operating exchanges themselves in the 26 states that have declined to shoulder the burden on their own.

Even with the lack of support from the states, the Obama administration claims it will be ready to run the exchanges by the time the program starts accepting enrollments this fall for coverage beginning in 2014.

“We are making great progress. We are on track, and we will be ready for people all across the country to obtain high-quality affordable health care coverage beginning on October 1,” Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, told the Senate Finance Committee on Thursday.

States that declined to take an active role in next year’s exchange program can apply later this year to run their own exchanges in 2015, an option that Cohen said will remain available in coming years.